Senate Passage Sends Postal Reform to Conference

The Senate passed a sweeping bipartisan postal reform bill yesterday, but many obstacles remain before it becomes law. Passed by unanimous consent, it is the first such bill to gain Senate approval in nearly 36 years.

A similar bill passed the House of Representatives last summer. Now a conference committee of Senate and House members has to resolve the differences between the two bills, though no timeframe has been announced for those meetings. If and when a compromise is reached, the conference submits a report to both chambers for final approval. After that, the bill would go to President Bush.

But getting through the conference committee may be arduous - even though the Postal Reorganization Act spent only five weeks in conference committee in 1970 before being signed into law.

"Conference committees are notoriously difficult to convene and to conclude," said Robert E. McLean, executive director of the Mailers Council, Arlington, VA. "They are time consuming and take place when it is convenient and when [lawmakers] are not involved in other pressing issues."

Industry observers also are concerned that the White House will pressure the committee to ensure that the final bill is "budget neutral" and drop provisions involving an escrow account and retirement benefits. And there are rumors that the Senate bill was not cleared for action until several fiscally conservative senators were assured that the budget neutrality issue would be addressed in the conference committee.

Indeed, Rep. John M. McHugh, R-NY, the main sponsor of the House bill, H.R. 22, said the differences lie not between the House and Senate, "the bigger challenge lies with resolving the issues raised by the administration."

The Senate Committee on Homeland Security and Governmental Affairs voted 15-1 to pass S. 662 out of committee in June, but it sat for six months because of a senator's hold.

The bill relieves the U.S. Postal Service of responsibility for retirement benefits earned by its employees during military service before working for the USPS, similar to other government agencies. This shifts an eventual responsibility of $27 billion to the Treasury from the USPS. It also eliminates the measure requiring the postal service to place $3.1 billion into an escrow account this year, which postal officials said was the only reason for last month's 5.4 percent across-the-board rate increase.

The Bush administration expressed support for reform in its fiscal 2007 proposed budget but said it "must be accomplished in a responsible manner that is fair to taxpayers, ratepayers and postal service employees. It must ... not have an adverse impact on the federal budget."

Though a bill can die in conference, McLean said, "we believe there is enough bipartisan interest to make the odds of a successful conference committee very high." But the final bill that emerges could differ heavily from either version that entered the conference committee.

The Senate bill also seeks to improve postal finances, and it gives more power to the independent Postal Rate Commission, changing it to a regulatory agency with authority to rule on postal rates and more. This is a key reason that postal management, after working with Congress for several years on the legislation, began expressing extreme opposition to the bill last month.

"We believe there are critical elements missing from this bill, as well as numerous burdensome provisions that would make it extremely difficult for the postal service to function in a modern, competitive environment," the USPS governing board wrote in a letter to Sen. Susan Collins, R-ME, one of the bill's sponsors and chair of the Senate Committee on Homeland Security and Government Affairs.

Tom Day, USPS senior vice president for government relations, warned that the bill's passage, when coupled with the Bush administration's demands on military retirement costs, could increase stamp prices as much as 20 percent in the near future. Day also said it doesn't give the USPS the necessary rate flexibility.

"The bill will keep the postal service tied to the current ratemaking method, which is layered with a Consumer Price Index rate cap," he said. "We would have no new ways to grow revenue and mail volume to continue to support universal service."

Last month's media blitz hurt the postal service's relationship with lawmakers, said John A. Greco Jr., president/CEO of the Direct Marketing Association.

"We were very surprised and disappointed to see the postal service try to undermine the [reform] effort," Greco told members of the Direct Marketing Club of New York last week. "I think they have done some significant damage to their relationships in Washington."

Greco said the 18 percent to 20 percent rate increase the USPS warned about "is totally not reality. While it got a lot of people's attention, the Senate bill clearly includes a strong rate cap." He also said the House and Senate bills offer "significant flexibility ... to really modernize the infrastructure and be able to offer significant savings for high-volume Standard and First-Class mailers. And for the largest users, the potential savings here could exceed $100 million over 10 years time."

Collins will serve on the conference committee, as will bill co-sponsor Tom Carper, D-DE. Other senators include Robert Bennett, R-UT; Norm Coleman, R-MN; George Voinovich, R-OH; Ted Stevens, R-AK; Joe Lieberman, D-CT; and Daniel Akaka, D-HI. The House hasn't named its members yet.

Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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